USD/JPY surges to fresh session peak, eyeing to reclaim 117.00

The USD/JPY pair's recovery momentum gained further traction in the last hour, accelerating the move to a fresh session peak. 

Currently trading around 116.70 region, the pair caught fresh bids near 116.00 handle after surprisingly stronger-than-expected average hourly earnings growth of 0.4% in December as against previous month's unexpected contraction by 0.1% and 0.3% growth expected. 

After Thursday's disappointing ADP report, economists had already scaled down their expectations from today's headline number and hence, today's report was primarily looked upon for its implications on inflation. Upbeat earnings growth, coupled with expected aggressive fiscal policies by the incoming Trump administration, now seems to be fueling hopes of inflationary pressure and reaffirmed expectations of 2-3 Fed rate-hike moves in 2017. 

Looking at the other aspects of the jobs report, the US economy added far less than expected new jobs in December, and the unemployment rate also ticked higher to 4.7% as more people entered the labor force, which again portrayed healthy job market. 

Today's mixed jobs report provided an additional boost to the US Dollar's recovery from Thursday's three-week low, touched in the aftermath of slightly less hawkish FOMC minutes. 

Technical levels to watch

A follow through buying interest should assist the pair to reclaim 117.00 handle and continue heading higher further towards 117.30 resistance area. On the flip side, 116.30 level now seems to protect immediate downside. Weakness below this immediate support might now be bought into and hence, might limit any further downslide near 116.00 round figure mark.